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Bulgaria Needs a Regulated Floating Exchange Rate

Author

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  • Ivan Angelov

Abstract

The article analyzes the application of a permanently fixed exchange rate of the leva to the euro over the last 11 years. The dangerous increase in the current account deficit and the low competitiveness of exports are due, among other factors, to the permanently fixed exchange rate in the conditions of relatively high inflation and slow growth of labor productivity. The large inflation differential between Bulgaria and the Eurozone will require passing through a very high exchange rate threshold upon adoption of the Euro, with severe economic and social consequences. It is recommended to adopt a managed floating exchange rate. The positive and negative aspects of moving to a managed floating exchange rate are outlined.

Suggested Citation

  • Ivan Angelov, 2009. "Bulgaria Needs a Regulated Floating Exchange Rate," Ikonomiceski i Sotsialni Alternativi, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 112-118, January.
    • Handle: RePEc:nwe:iisabg:y:2009:i:1:p:112-118
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